Question of the Week
Answer: First, you’ll need to understand the inherent value of your product. What sets you apart from the wholesale buyer the restaurant typically gets its product from? Is your product local, organic, grass-fed or antibiotic-free, or a specialty item? Feature those attributes when marketing your products. These values set your products apart from others and will justify a price premium.
Producers should realize that selling to restaurants is a wholesale market; it is unrealistic to expect restaurants to pay retail prices (such as those received at a farmers market). Local producers can sometimes demand a premium above the wholesale prices that restaurants usually pay for produce. These premiums commonly range from 5% to 25% (and sometimes more) above the current wholesale market price. Specialty or hard-to-find items may be grown locally at a lower cost, and chefs may be interested in paying a price premium for those items. In general, chefs are often willing to pay a little more than wholesale for high-quality, reliable local produce.
A good place to start is organic terminal market prices. It is in a database form and you can search by product and market location. The direct link to the index is http://www.rodaleinstitute.org/Organic-Price-Report.
This resource has information for some conventionally grown products as well, but it focuses primarily on organics. If you are instead looking for conventional, data the USDA AMS Market News is the best source for current conventional produce prices and is available at http://marketnews.usda.gov/portal/fv.
When considering direct market sales to restaurants, ATTRA suggests using these market reports and then increasing the price by 25%, especially if you are in an area with a lot of high-end restaurants willing to pay a price premium. So, for example, if the wholesale price for basil is $8.00 for a dozen bunches, then multiply 8 x 1.25 = $10.00/dozen bunches.
For more information, see the ATTRA publications Selling to Restaurants at https://attra.ncat.org/attra-pub/summaries/summary.php?pub=266, and Tips for Selling to Restaurants at https://attra.ncat.org/attra-pub/summaries/summary.php?pub=388.
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